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November 6 Ballot Question: Multi-Year Leases for State Agencies

October 30, 2012

During the last legislative session, the Georgia General Assembly passed Senate Bill 37, a bill that this election will allow voters to decide whether state agencies can enter multi-year lease agreements. Presently, the State is only allowed to enter into one year building leases. However, if Amendment 2 passes, the change will allow state agencies to enter into leases for up to 20 years.

If the amendment is passed, here are a few of its benefits:

Provides improved state budget projections by enabling agencies to anticipate rental obligations and thereby achieves more efficient management of state resources.

Enhances landlord interest, which leads to greater competition and lower rates while increasing the pool of participating landlords.

Improves rental rates due to landlord ability to obtain better financing and amortize tenant improvement dollars over a longer period of time.

Offers no adverse impact on the state's AAA bond rating.

The state's estimated first year savings under the multi-year lease program would be almost $3.5 million, and the estimated 10 year savings would be more than $66 million.

There are also several safeguards to the multi-year lease program. Each multi-year agreement will be approved by the State Properties Commission. SPC is in charge of approximately 1800 state leases. In addition, each agreement would include a clause that states it is subject to annual budget appropriations. Finally, the total multi-year lease contract for each year could not exceed an annual cap set by the Georgia State Financing and Investment Commission. GSFIC manages the state’s long term debt.

About the Author

Paul Melvin is Director of Communications for the State Property Office. He has worked for the State of Georgia for over 25 years in various management and leadership positions.